Is the premium car arms race about to go horribly wrong?

Is the premium car arms race about to go horribly wrong?

New platforms and architectures are in development from global premium brands, which could leave the mass market behind

Earlier this week, Volkswagen denied a story that it was running into financial problems, caused mostly, it was claimed, by the massive investment involved in rolling out its huge range of models based on the new MQB platform.

According to analysts at Morgan Stanley, the bill for the whole MQB adventure – which includes the cost of converting over 20 factories to build the new architecture – could come to as much as £70 billion. Usually, that sort of industrial investment is in the realm of military engineering projects, such as the Lockheed Martin F22 stealth fighter.

The MQB will eventually underpin around 40 different models across various VW Group brands, and the economies of scale when you are buying, say, millions of identical seat frames every year, are potentially massive.

But Germany’s Manager Magazin claimed earlier this week that VW was going to miss its planned profit margins as the company saw sales dipping in Europe and the costs of rolling out the MQB proving to be higher than expected. The magazine’s assertion was strongly challenged by VW, which said that the suggestion it would not meet its targets ‘was wrong.’ Arguably a classic non-denial denial, which could mean VW will indeed meet its profit target,

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